Credit Acceptance Corporation (NASDAQ:CACC) Q3 2024 Earnings Conference Call October 31, 2024 10:00 AM ET

Company Participants

Jay Martin - CFO
Ken Booth - CEO

Conference Call Participants

Moshe Orenbuch - TD Cowen
John Rowan - Janney Montgomery Scott
John Hecht - Jefferies
Rob Wildhack - Autonomous Research
Ryan Shelley - Bank of America

Operator

Good day, everyone, and welcome to the Credit Acceptance Corporation Third Quarter 2024 Earnings Call. Today’s call is being recorded. A webcast and transcript of today’s earnings call will be made available on Credit Acceptance’s website.

At this time, I’d like to turn the call over to Credit Acceptance’s Chief Financial Officer, Jay Martin.

Jay Martin

Thank you. Good morning, and welcome to the Credit Acceptance Corporation third quarter 2024 earnings call. As you read our news release posted on the Investor Relations section of our website at ir.creditacceptance.com and as you listen to this conference call, please recognize that both contain forward-looking statements within the meaning of federal securities law. These forward-looking statements are subject to a number of risks and uncertainties. Many of which are beyond our control and which could cause actual results to differ materially from such statements.

These risks and uncertainties include those spelled out in the cautionary statement regarding forward-looking information included in the news release. Consider all forward-looking statements in light of those and other risks and uncertainties. Additionally, I should mention that to comply with the SEC’s Regulation G, please refer to the financial results section of our news release, which provides tables showing how non-GAAP measures reconcile to GAAP measures.

At this time, I will turn the call over to our Chief Executive Officer, Ken Booth, to discuss our third quarter results.

Ken Booth

Thanks, Jay. Overall, we had another mixed quarter as it relates to collections and originations, two key drivers of our business. Our 2022 vintage continued to underperform our expectations and 2021, 2023 and 2024 also declined. Overall, a modest decline of 0.6% or $62.8 million in forecasted net cash flows.

As we have previously communicated, historically our models are very good at predicting loan performance in aggregate, but our models work best during less volatile times. The pandemic and its ripple effects created volatile conditions, federal stimulus, enhanced unemployment benefits and supply chain disruptions like the vehicle shortages, inflation et cetera, all of which impacted competitive conditions. We had larger-than-average forecast misses both high and low during this volatile period. But, because we understand forecast and collection rates is challenging, our business model is designed to produce acceptable returns in the aggregate, even if loan performance is less-than-forecasted.